Benzinga | Jul 23, 2021 06:17AM EDT

Kodiak Sciences Reported in 8-K Filing that Baker Bros Acknowledged in a Letter that Second Funding Amount Would Not Paid; Royalty Amount on Sales of KSI-301 Would be Reduced from $1.025B to $450M

In December 2019, Kodiak Sciences Inc. together with its subsidiary Kodiak Sciences GmbH (collectively, "Kodiak") entered into a fundinga greement (the "Funding Agreement") with certain assignees of Baker Bros. Advisors, LP (collectively, "BBA") under which BBA agreed to fund up to$225.0 million in the aggregate in exchange for the right to 4.5% royalties on Kodiak's potential future net sales of KSI-301 and certain other products. The royalty was capped at 4.5 times the total amount funded under the Funding Agreement. BBA funded $100.0 million at closing in February 2020, with the remaining $125.0 million to be funded upon receipt of Kodiak's notice that it had satisfied specified product development criteria and making certain certifications to BBA. At Kodiak's request, BBA acknowledged and confirmed on July 22, 2021 in a letter agreement (the "Letter Agreement") that, despite Kodiak being in a position to satisfy the product development criteria, the second funding amount would not be paid and the aggregate royalty cap under the Funding Agreement would be reduced from $1,012.5 million to $450.0 million. The request was made in light of, among other factors, Kodiak's strong balance sheet due to the $612.0 million capital raise in November 2020, its clinical trial progress and capital resources. An independent committee of the Board of Directors of Kodiak ratified the decision not to draw the second funding payment.